Govt Mulls Invoking Essential Commodities Act as Supply Disruptions Push API Costs Up to 300%

The Department of Pharmaceuticals (DoP) has been actively engaging with industry stakeholders through a series of meetings to assess the ground situation, sources familiar with the matter told The Economic Times.

Namit Joshi, chairman, Pharmexcil (Pharmaceuticals Export Promotion Council of India), stated, "The government is planning to trigger the Essential Commodity Act for our industry so that black marketing and hoarding can be avoided. We await the final decision. Hopefully the supply chain would be reinstated soon."

"We have been having meetings with the industry and ministry of petroleum and natural gas (MoPNG). The meeting was organised under the umbrella of department of pharmaceuticals of the ministry of Chemicals and fertilizers. Inter-ministerial discussions were held where relevant stakeholders presented their requirements to MoPNG. We have collated the requirements and shared them with MoPNG," added Joshi.

This came as industry observers noted that the ongoing geopolitical conflicts have significantly affected the availability of critical raw materials, leading to steep price increases ranging between 200–300% in some cases.

"The PNG shortage, container shortages are adding pressure on distribution," an executive stated.

According to industry executives, prices of essential APIs and solvents have witnessed a sharp rise in recent days due to the ongoing conflict, adding further strain on manufacturers.

On average, in line with the above, API prices have increased by 30–35% in recent weeks. Among them, glycerine prices have surged by 64%, while paracetamol has recorded a 25% rise and ciprofloxacin has become 30% costlier.

The impact has also extended to packaging materials, with prices of polyvinyl chloride (PVC) and aluminium foil increasing by around 40%, as per industry sources.

The effects are being felt across the pharmaceutical value chain. Essential components such as glycerine, propylene glycol, and other solvents used in liquid formulations—including syrups, oral drops, and sterile products—have all become more expensive, along with key intermediates required for manufacturing.

"With supply cuts and sharp price escalation, both pharma manufacturers and packaging suppliers are under increasing stress," Abhay Srivastava, senior president of operations at Mankind Pharma told ET.

The industry has urged the government to consider relief measures similar to those implemented during the Covid-19 pandemic, when pharmaceutical products were brought under the essential commodities framework to ensure uninterrupted production.

Pharmexcil has also previously requested freight subsidies and logistical support to offset rising operational costs.

"Any interruption to manufacturing carries far-reaching consequences not just for patients at home, but for international pharmaceutical supply chains that depend heavily on Indian production," one of the experts stated.